Asset manager Schroders has launched a Chinese renminbi-denominated fixed income fund as part of its offshore Schroder International Selection Fund range.
The Schroder ISF RMB Fixed Income fund will be managed from its Singapore office by the Asian Fixed Income team led by head of Asian fixed income Rajeev de Melllo and Asian fixed income fund manager Angus Hui.
Global head of fixed income Karl Dasher says: “After the success of the Hong Kong-based offshore RMB bond fund, launched in 2010, and the continued growth and development within the offshore RMB bond market, we are keen to extend this product offering to a broader range of clients via our Luxembourg platform.
“This reflects Schroders’ commitment to the developing asset class, which has enjoyed an exceptional growth trajectory over recent years and our belief that the RMB’s importance in a global context is increasing rapidly, providing a solid long-term fundamental story for the currency.”
Rajeev de Mello adds: “In the current low interest rate environment, offshore RMB bonds provide an attractive yield of 4 per cent for the overall index and 3.6 per cent for the investment grade non-government sector.
“With now higher yields and a wider investment universe to add value from security selection and relative value rotation, offshore RMB bonds provide investors with multiple sources of return potential in addition to the currency appreciation. The investment grade quality of credits combined with a robust yield, not only offers investors a practical way of protecting their portfolios from global uncertainty but also gives them long-term potential in an exciting and growing market.”
According to its key investor information document, the Chinese bond fund’s objective will be to provide a long-term return of capital growth and income in renminbi terms, through investment in a portfolio of renminbi-denominated bonds and money market instruments.
At least two-thirds of the fund – excluding cash – will be invested in bonds issued in onshore or offshore renminbi or another currency hedged to renminbi by governments, government agencies and companies “which may or may not be established or incorporated in mainland China”.
The fund will be going up against other players in the renminbi fixed income space such as Allianz Global Investors, BlackRock, Fidelity, HSBC, and Invesco – all of whom have launched similar products during the past 18 months.
The fund will be benchmarked against the HSBC Offshore RMB Investment Grade Bond Total Return index.
The A share class has a one-off entry charge of 1 per cent and an ongoing charge of 0.84 per cent, while its C share class carries an entry chage of 5 per cent and an ongoing fee of 1.31 per cent.
Earlier this year, the asset manager announced the launch of three emerging market debt funds – Schroder SISF Emerging Market Sovereign Bond, Schroder SISF Emerging Markets Bond and Schroder SISF Emerging Market Corporate Bond funds – through its offshore range.